This is a guest post by Chris Richardson.

A little under a month ago Edinburgh University Settlement was declared bankrupt and I started to consider how I would write this piece. Let me put my cards on the table up front, I was asked to write this because I was once uniquely positioned to witness the activities of Edinburgh University Settlement (EUS) in its steadily accelerating decline to oblivion. To say that the years I spent involved with EUS were amicable (for either me or some of the management of EUS) would be untruthful – I have over the years been called many things, but ‘trouble causer’ is one that I actually don’t mind – sometimes things just need a little shaking up!

Having said that, the concept behind EUS was courageous and worthy, the projects were pioneering and met the needs of some of the more vulnerable and often forgotten members of our society, and the majority of the staff employed by EUS were conscientious and always put their clients’ needs first. I want to pass my condolences to those staff and clients who lost so much at the end of October 2010; you are the real victims of this debacle. No one I know (even the most avid critic of EUS) wanted the charity to fail, indeed, their objections were always founded on the belief that if the EUS ship did not change course it was going to hit the rocks very hard, but we are jumping the gun a little. In short, EUS as a charity was valuable and will be much missed and none of what follows should be taken as a criticism of the concept, the projects or the majority of the staff.

So what went wrong?

I’ve not bothered with the history of EUS. As someone far more eloquent than myself put it, “history is just one damn thing after another” and in this case would be a dated list of new projects interspersed with property deals and arguments. Quite a good synopsis of the recent history of EUS can be read in Tychy’s post ‘Too Big to Fail?’ There is also an alternative and somewhat rose tinted view by Ericka Duffy (an ex-employee of EUS) on the Guardian Edinburgh website. The history is not as interesting as the ethos that existed within the organisation, and in my view, it’s this ethos that crashed EUS, not a list of disassociated events. More importantly, it’s the story of this ethos that should serve as a warning to other charities and other trustees on how not to run a charity!

Let’s be clear, in my view (and probably that of OSCR), trustees are where the buck stops. They set the priorities for any organisation, charitable or otherwise. They set the long term strategy and they hire the key management staff. They then work with the management staff to create a business plan (in line with that long term strategy) and then leave the staff to advance that plan with regular updates on progress. It’s not rocket science! Unfortunately as Mr Cartwright of PWC is no doubt discovering, this wasn’t the model that EUS appeared to follow.

Many years ago they employed a Director, Nick Flavin. Now Ericka Duffy in her piece has described Nick Flavin as a “flamboyant and kind-hearted” man, and whilst I would not agree completely with that description, I recognise that others did see him in that light and indeed some members of staff could even be said to have idolised him. Nick Flavin is a very articulate and engaging character; he speaks with passion and will go out of his way to meet your needs, even when they directly conflict with the needs of others whose needs he has also agreed to meet.

I am fairly sure that when Nick Flavin began his directorship of EUS, that agreed model of Trustee responsibility was in place, however, over the “28 odd” years that he remained in post, there was a seismic shift in responsibility. The board of trustees (or Executive Committee as EUS called it) ceased to be the prime movers in policy and strategy and became no more than a rubber stamp for the ideas and pet projects of the Director. Times have been hard for a while in the sector and attracting volunteer board members has been difficult for many years as I am sure many others involved in charitable/voluntary organisations will agree.

As EUS had no specific trustee recruitment policy that I could see, the responsibility fell on the Director, who obviously recruited friends and associates, who in turn trusted the Director at his word, leading to a tacit transfer of power. This was not an overnight sensation, but more a long drift towards the present situation.
Don’t get me wrong, there were opportunities for others to become involved, indeed friends of mine were once on the Executive. Their experiences are telling. They talk of meetings where bank loan documents were circulated at the beginning of the meeting and the Executive told to take 5 minutes to read them and then vote to approve them. Not a lot of time for the Trustees to partake in careful consideration of the financial ramifications or the impact on the long term strategy of the organisation. Indeed, come to think of it, I do not at any point recall seeing an EUS strategic plan. My assumption from this is that the majority of the Executive (the Flavin camp as we could call them) were more than happy to accept that the strategy was in Nick Flavin’s head, and that was sufficient.

Now I want to make it clear, at no point do I think that Nick Flavin intentionally set out to take the real power of EUS into his own hands, it’s just something that happened gradually, almost invisibly, and he thought that what he was doing was for the best. We all know where a road paved with good intentions leads us though!
The elephant in the room here is David Duff – how did he get involved? Well, for those that have read the brief bio of Nick Flavin, you’ll notice that there is not a lot of business experience in there. The fact is that running a charity in Scotland now is akin to running a business, the only difference being that instead of making a profit for your owners/shareholders, you make a surplus to reinvest (well, that’s the general idea – not always adhered to).

Nick Flavin’s lack of business experience could be said to have contributed to a number of issues, not least a lengthy legal battle in 2005/6 over the GRV lease as well as a failure to understand the full ramifications of the 2005 charity legislation (indeed, the Executive were convinced that they were not classed as Trustees as only the Holding Trustees were liable – wonder how many had a rude surprise when they were told that they might be financially liable for any outstanding debts).

As such, David Duff came on the scene to advise the Director and the Executive on the best business course of action. EUS had previously employed financial staff, but they all retired or resigned within a week of each other (a hint of trouble brewing possibly). Following that they employed a Charity Business consultant, but his services were no longer required when he proposed selling off property to alleviate short term debt. Indeed, Nick Flavin had been convinced by David Duff that this was a foolish course of action, that investing in property was the way forward and David Duff even assisted in drafting the proposal and letter severing the relationship with the business consultant he ended up replacing.

In short, David Duff became a shadow director of EUS. Nick would rarely move on an issue without checking it with David Duff. The charity was paying for a Director who had convinced his trustees to pay for a consultant to do most of the work that you would expect the Director to do. I even discovered once that the monthly Director’s reports to the Executive were written by David Duff and emailed to Nick Flavin to send out to the Executive. Paying two people to essentially do one job at a total cost of close to £100,000 could be one of the reasons that EUS was overspending by £300,000 annually.

The quality of the advice David Duff gave, or the intentions behind it are neither here nor there to me. Likewise his previous convictions are irrelevant. My view is that he gave the advice that he thought would keep EUS going as long as possible, and therefore keep his consultancy fees and expenses coming in. If he has made any unjustified material gain from EUS, I suspect Mr Cartwright will discover that.

So who, if anyone, should have stepped in, the University, OSCR, SCVO? All organisations who might have had a chance, but only if EUS had recognised its problem. EUS and its trustees were likely in denial right up to the end. When the University pulled its funding of student activities from EUS, that could have been taken as a not too subtle hint that the organisation was off course.

The trustees could have re-examined their position, their way of working and turned things around. Instead they claimed a sense of entitlement and berated the University for ‘baring a grudge towards EUS’. I suspect this position was taken as a consequence of stories told by Nick Flavin, now synonymous with EUS and vice versa. Perhaps OSCR’s letters of concern would have been the spark, but instead they just assumed that the letters were prompted by disgruntled ex associates and dismissed them with a cursory response telling OSCR what it wanted to hear, again at the prompting of Nick Flavin no doubt.

The only people who could have prevented this from happening were Nick Flavin and the trustees of EUS. For that to have happened they would have had to take the uncomfortable step of admitting that they had made some poor decisions in the past. Unfortunately, either collectively or individually, they could see nothing wrong in their previous actions, and the difficulties were all caused by external forces. I wonder if they still hold that view now.